An automaker is buying some special tools for $100,000. The tools are being depreciated by double declining balance depreciation using a 4-year depreciable life and a $6250 salvage value. It is expected the tools will actually be kept in service for 6 years and then sold for $6250.

The before-tax benefit of owning the tools is as follows: Year Before-Tax Cash Flow 1 $30,000 2 30,000 3 35,000 4 40,000 5 10,000 6 10,000 6,250 Selling price